The infamous agency affiliated with Hurricane Katrina, FEMA, was
the one doing the refunding and this is how it went down:

FEMA has something called the Hazard Mitigation Grant Program
(HMGP), which "provides grants to States and local governments to
implement long-term hazard mitigation measures after a major
disaster declaration." It was originally created to "reduce the
loss of life and property due to natural disasters."

Now who's eligible for the program?

State and local governments

Indian tribes or other tribal organizations

Certain non-profit organizations

Individual homeowners and businesses may not apply
directly to the program; however a community may apply on their
behalf.

So individuals aren't supposed to get special treatment, and yet
FEMA only "acquired" 68 homes in the area, with Knowles' home
being one of the last four added,
according to KHOU.

But as the details of the program continue on, they become a
little more subjective to how you interpret them. For instance,
FEMA can use funds to purchase/protect "public or private
property that has been subjected to, or is in danger of,
repetitive damage."
If you go back and look at the slideshow we did of Beyonce's
neighborhood, you can see that her neighborhood, Pirates
Beach, is pretty nice and right on the beach. Reports say that
the beach will be widened to guard property from future
disasters, meaning that Beyonce's house may fit the criteria
stated above.

Basically, FEMA words its agreements very broadly, so pretty much
anything goes in this case. Below, a copy of the Hazard
Mitigation Grant Program Fact Sheet for your review.